Insurers step up role in Obamacare

The insurance industry believes Obamacare is here to stay no matter who wins control of the Senate this fall.

A lot more insurers plan on taking part in Obamacare next year — a 25 percent increase, HHS Secretary Sylvia Mathews Burwell announced Tuesday. She called it a sign that the administration is “making historic progress” in covering the uninsured.

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“When you consider the law through the lens of affordability, access and quality, the evidence points to a clear conclusion: The Affordable Care Act is working,” Burwell said at the Brookings Institution in one of her first major speeches as secretary. “And families, businesses and taxpayers are a better off as a result.”

Insurers stand to be better off, too. The industry has invested heavily preparing for the law, expects a growing business from the new markets, and knows that insurance is “sticky” — once a customer buys a plan, chances are he or she will stick with it. Repeal doesn’t just mean taking coverage away from the newly-insured. It means taking customers away from the insurers, too.

The HHS report is preliminary. There could still be changes before open enrollment for the second season begins Nov. 15. But the higher health plan participation numbers for 2015 — including some of the country’s biggest carriers — don’t come as a surprise to health policy consultants and analysts.

“It’s become clear that insurers can make money,” said Dan Mendelson, CEO at Avalere Health. The health plans are aggressively angling for a bite at the heavily subsidized and previously hard-to-reach market, he said.

Ceci Connolly, managing director of PwC’s Health Research Institute, said the new interest from insurers was greater than anticipated and builds on the case that campaign rhetoric aside, the Affordable Care Act is permanent.

PwC’s insurer clients “have been confident for quite some time” that some adjustments may be made to Affordable Care Act, “but the fundamental underpinnings of that law are here to stay,” Connolly said.

It’s the biggest growth opportunity in the industry, she said.

“You are skipping this at your own risk,” Tom Scully, who held senior health jobs in both Bush administrations, said of the insurers bigger footprint in the exchange market.

Major insurers that blanched at jumping into the exchanges the first year, like United Healthcare, are making a big play for the business in 2015. United will offer plans in as many as two-dozen states, its CEO announced in an earnings call with analysts this summer. Other big insurers already in some markets have said they will move into more states as well, including Cigna and Aetna.

The markets are not just attracting the big insurers, either, but also regional ones.

Upstarts including the nonprofit Obamacare backed cooperative plans that enrolled more than 400,000 people in the first year, are expanding their footprint. Twenty-three CO-OPs will be offering plans in 26 states, according to the National Alliance of State Health CO-OPs. Existing CO-OPs will move into three new states, and a new nonprofit insurer will be offering plans in Ohio.

Stuart Butler, a conservative economist now at the Brookings Institution, noted that some states had very few plans in the first year, so the 25 percent increase might be growth from “a very small base,” he wrote in an email. “But I do think the insurance industry is now moving from uncertainty (with the politics as well just the market uncertainties) to figuring how to design and price products for a new health system.”

The administration is trying to hammer its message that the health care law is working — a phrase Burwell repeated throughout her speech — despite the long-lingering political debate between Republicans and Democrats in Washington. Obamacare’s supporters are hoping that the new secretary, who doesn’t have the political baggage that predecessor Kathleen Sebelius carried, can put a new face on the law.

Burwell said she hopes to be a part of “collectively turning down the volume a bit” on discussions around the president’s signature legislation. “Surely, we’d all agree that the back and forth hasn’t been particularly helpful to anyone,” she said.

But it’s far from certain that the law’s Republican opponents think Obamacare deserves less debate. As recently as last week, they cited government reports that found some insurers are selling Obamacare plans without separating abortion funding from taxpayer money, an apparent violation of the law’s prohibition on federal funding of abortion. And they’re still blaming the health law for raising costs, limiting choices and, through what they cite as security flaws in HealthCare.gov, endangering people’s privacy.

Overall, 77 new insurers will join exchanges next year in the 44 states that had available data, HHS said. On the federal HealthCare.gov, there will be 57 new issuers, a 30 percent increase from the 191 on the exchange this year, according to an HHS report released Tuesday. In the eight state-based marketplaces with data available, there will be six more issuers, marking a 10 percent increase.

It’s not growth across the board though. Some state data was not available. Among the missing states in the HHS report was Minnesota — where the health plan PreferredOne, which covered more than half of the individuals in the state exchange, announced it was pulling out last week. At least 13 other insurers across the country are dropping out, too.

Still the trend is more not less, and the bigger the insurers’ stake, the harder it is to roll back.

Republicans shut down the government last fall because they knew that once the subsidies began to flow, “it would be nearly impossible to put the toothpaste back in the tube,” said Lambert van der Walde, a former CMS official in the George W. Bush administration and health policy analyst.

The question going forward, he said, is how many people will enroll next year, and how many of those are newly covered.